The Australian Taxation Office (ATO) has issued its final ruling explaining the GST treatment of prizes awarded for competitions at country shows, through radio and television, at casinos, clubs and other activities.
The ruling follows lengthy consultation between the Tax Office and the community, broadcasters, agricultural show societies and the gaming industry.
One of the general principles of the ruling is that GST does not apply to low value medals, ribbons and trophies awarded as a symbol or recognition of achievement.
When does GST apply?
The only circumstances where people pay GST on winnings are where the winner is registered for GST and they participate in the event as part of their business.
Country shows
Exhibitors at agricultural shows and fetes are not subject to GST on the medals, ribbons or trophies typically awarded at these types of events.
Trophies, medals and ribbons
In the case of people registered for GST who participate in events as part of their business, they do not pay GST on typical trophies, medals or ribbons awarded to recognise achievement. For example, this includes medals won in the Olympics or the Commonwealth Games. Similarly, winners of perpetual trophies are not subject to GST.
Professionals
Where participants of sporting events are registered for GST and they participate as part of their business, they will be required to pay GST on their winnings. For example, this applies in the case of the winner of the Melbourne Cup, the grand final winning NRL Club, a professional golfer who wins the Australian Open. This has been the case since 1 July 2000.
Cash winnings are subject to GST if the winner is registered for GST and they participated in the event as part of their business.
Amateurs
School children are not subject to GST on prizes for any school competitions.
Contestants in TV game shows are not generally registered for GST and therefore will not be subject to GST on prizes.
Amateur sports people who are not registered for GST will not have to pay GST on their prizes. However, even if registered for other purposes, and the sporting event is not part of their business, then GST does not apply to the prize.
People seeking clarification of how the ruling applies to their situation should seek a private binding ruling from the ATO. The ruling, GSTR 2002/3 - Goods and services tax: prizes, can be viewed
here.